G.R. No. L-8169, December 29, 1913
ANTONIO M. A. BARRETTO, plaintiff-appellant, vs. JOSE SANTA MARINA, defendant-appellee.

FACTS:
Antonio M. A. Barretto filed a complaint against Jose Santa Marina, the owner of La Insular Cigar and Cigarette Factory. Barretto alleged that he was the agent and manager of the factory under a contract whereby Santa Marina hired his services for as long as Barretto did not show “discouragement,” with an annual salary of P37,000. On January 8, 1910, Santa Marina summarily dismissed Barretto from his position. Barretto claimed his salary for the year 1910 (P37,000) as his first cause of action and sought an additional P100,000 as indemnity for losses and damages resulting from his alleged unlawful dismissal, constituting his second cause of action.

The trial court sustained the defendant’s demurrer (motion to dismiss) to the second cause of action. After trial on the first cause of action, the court rendered judgment ordering Santa Marina to pay Barretto his salary for the first eight days of January 1910 and for the following month, at the rate of P3,083.33 per month. The court dismissed the second cause of action. Barretto appealed.

ISSUE:
1. Whether the defendant had just cause to dismiss the plaintiff from his position as agent and manager.

RULING:
The Supreme Court AFFIRMED the judgment of the lower court.

1. On the Validity of the Dismissal: The Court found that the defendant had just cause to revoke the plaintiff’s authority and dismiss him. The evidence established that the plaintiff had tendered a resignation. Furthermore, the plaintiff, as agent, had contracted a loan for the business without the principal’s approval, an act which caused alarm among the factory’s stockholders and constituted a breach of trust. Under Article 300 of the Code of Commerce, fraud or breach of trust is a special reason authorizing a principal to discharge an employee even before the contract period has elapsed. Since no fixed period for the plaintiff’s employment was stipulated, the defendant acted within his rights in revoking the agency.

The Supreme Court held that the lower court’s judgment, awarding one month and eight days’ salary and dismissing the claim for damages, was in accordance with law.